25.1229.01000
Sixty-ninth
Legislative Assembly
of North Dakota
Introduced by
Representatives Steiner, Kasper, Maki, Wolff, Toman, Motschenbacher
Senators Magrum, Paulson, Wobbema
A BILL for an Act to amend and reenact subsection 3 of section 54-35-26 and section
57-40.2-03.3 of the North Dakota Century Code, relating to evaluation of economic
development tax incentives and the use tax exemption for raw materials, single-use product
contact systems, and reagents used for biologic manufacturing; to repeal section 57-39.2-04.19
of the North Dakota Century Code, relating to the sales tax exemption for raw materials,
single-use product contact systems, and reagents used for biologic manufacturing; and to
provide an effective date.
BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
SECTION 1. AMENDMENT. Subsection 3 of section 54-35-26 of the North Dakota Century
Code is amended and reenacted as follows:
3.The legislative management interim committee assigned the study responsibility under
this section may examine economic development tax incentives, shall complete
analysis of the incentives it designates for analysis during the interim, and shall
approve a plan to provide that each of the economic development tax incentives listed
in this subsection is subject to a complete analysis within each six-year period. The
interim committee may include in its recommendations any amendments to this
section, including amendments to add or remove incentives from the list of incentives
subject to analysis under this subsection. Analysis must be completed for economic
development tax incentives, including each of the following:
a.Renaissance zone credits and exemptions.
b.Research expense credit.
c.Agricultural commodity processing facility investment credit.
d.Biodiesel fuel production facility construction or retrofit credit, biodiesel fuel
blending credit, and biodiesel fuel equipment credit.
Page No. 1 25.1229.01000
HOUSE BILL NO. 1571
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e.Seed capital investment credit.
f.Internship program credit.
g.Angel fund investment credit.
h.Workforce recruitment credit.
i.Soybean or canola crushing facility construction or retrofit credit.
j.Twenty-first century manufacturing and animal agricultural workforce incentive.
k.New or expanding business exemption.
l.Manufacturing and recycling equipment sales tax exemption.
m.Coal severance and conversion tax exemptions.
n.Oil and gas gross production and oil extraction tax exemptions.
o.Fuel tax refunds for certain users.
p.New jobs credit from income tax withholding.
q.Development or renewal area incentives.
r.Sales and use tax exemption for materials used to construct a fertilizer or
chemical processing facility.
s.Sales and use tax exemption for materials used in compressing, gathering,
collecting, storing, transporting, or injecting carbon dioxide for use in enhanced
recovery of oil or natural gas.
t.Sales and use tax exemption for enterprise information technology equipment
and computer software used in a qualified data center.
u.Sales and use tax exemption for raw materials, single-use product contact
systems, and reagents used for biologic manufacturing.
v.Sales and use tax exemption for materials used to construct or expand a coal
processing facility that utilizes coal as a feedstock.
SECTION 2. AMENDMENT. Section 57-40.2-03.3 of the North Dakota Century Code is
amended and reenacted as follows:
57-40.2-03.3. Use tax on contractors. (Effective through June 30, 2025)
1.When a contractor or subcontractor uses tangible personal property in the
performance of that person's contract, or to fulfill contract or subcontract obligations,
whether the title to the property be in the contractor, subcontractor, contractee,
subcontractee, or any other person, or whether the titleholder of the property would be
Page No. 2 25.1229.01000
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subject to pay the sales or use tax, the contractor or subcontractor shall pay a use tax
at the rate prescribed by section 57-40.2-02.1 measured by the purchase price or fair
market value of such property, whichever is greater, unless the property has been
previously subjected to a sales tax or use tax by this state, and the tax due has been
paid. This section does not apply to a contractor or subcontractor that does not enter a
contract for the purchase of the tangible personal property.
2.The provisions of this chapter pertaining to the administration of the tax imposed by
section 57-40.2-02.1, not in conflict with the provisions of this section, govern the
administration of the tax levied by this section.
3.The tax imposed by this section does not apply to:
a.Production equipment or tangible personal property as authorized or approved
for exemption by the tax commissioner under section 57-39.2-04.2.
b.Machinery, equipment, or other tangible personal property used to construct an
agricultural commodity processing facility as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.3 or 57-39.2-04.4.
c.Tangible personal property used to construct or expand a system used to
compress, process, gather, or refine gas recovered from an oil or gas well in this
state or used to expand or build a gas-processing facility in this state as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.5.
d.Tangible personal property used to construct or expand a qualifying oil refinery as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.6.
e.Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.10.
f.Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.11.
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g.Materials used in compressing, gathering, collecting, storing, transporting, or
injecting carbon dioxide for use in enhanced recovery of oil or natural gas as
provided in section 57-39.2-04.14.
h.Tangible personal property used to construct a qualifying fertilizer or chemical
processing facility as authorized or approved for exemption by the tax
commissioner under section 57-39.2-04.15.
i.Tangible personal property used to construct a qualified straddle plant, a qualified
fractionator, or qualified associated infrastructure as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.16.
j.Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.21.
k.Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.20.
l.Raw materials, single-use product contact systems, and reagents used for
biologic manufacturing as authorized or approved for exemption by the
tax commissioner under section 57-39.2-04.19.
m.Tangible personal property used to construct, expand, or upgrade a facility that
refines renewable feedstock into sustainable aviation fuel as authorized or
approved by the tax commissioner under section 57-39.2-04.18.
Use tax on contractors. (Effective after June 30, 2025, and through June 30, 2029)
1.When a contractor or subcontractor uses tangible personal property in the
performance of that person's contract, or to fulfill contract or subcontract obligations,
whether the title to the property be in the contractor, subcontractor, contractee,
subcontractee, or any other person, or whether the titleholder of the property would be
subject to pay the sales or use tax, the contractor or subcontractor shall pay a use tax
at the rate prescribed by section 57-40.2-02.1 measured by the purchase price or fair
market value of such property, whichever is greater, unless the property has been
previously subjected to a sales tax or use tax by this state, and the tax due has been
paid. This section does not apply to a contractor or subcontractor that does not enter a
contract for the purchase of the tangible personal property.
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2.The provisions of this chapter pertaining to the administration of the tax imposed by
section 57-40.2-02.1, not in conflict with the provisions of this section, govern the
administration of the tax levied by this section.
3.The tax imposed by this section does not apply to:
a.Production equipment or tangible personal property as authorized or approved
for exemption by the tax commissioner under section 57-39.2-04.2;.
b.Machinery, equipment, or other tangible personal property used to construct an
agricultural commodity processing facility as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.3 or 57-39.2-04.4;.
c.Tangible personal property used to construct or expand a system used to
compress, process, gather, or refine gas recovered from an oil or gas well in this
state or used to expand or build a gas-processing facility in this state as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.5;.
d.Tangible personal property used to construct or expand a qualifying oil refinery as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.6;.
e.Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.10;.
f.Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.11;.
g.Materials used in compressing, gathering, collecting, storing, transporting, or
injecting carbon dioxide for use in enhanced recovery of oil or natural gas as
provided in section 57-39.2-04.14;.
h.Tangible personal property used to construct a qualifying fertilizer or chemical
processing facility as authorized or approved for exemption by the tax
commissioner under section 57-39.2-04.15; or.
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i.Tangible personal property used to construct a qualified straddle plant, a qualified
fractionator, or qualified associated infrastructure as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.16.
j.Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.21.
k.Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.20.
l.Raw materials, single-use product contact systems, and reagents used for
biologic manufacturing as authorized or approved for exemption by the
tax commissioner under section 57-39.2-04.19.
Use tax on contractors. (Effective after June 30, 2029)
1.When a contractor or subcontractor uses tangible personal property in the
performance of that person's contract, or to fulfill contract or subcontract obligations,
whether the title to the property be in the contractor, subcontractor, contractee,
subcontractee, or any other person, or whether the titleholder of the property would be
subject to pay the sales or use tax, the contractor or subcontractor shall pay a use tax
at the rate prescribed by section 57-40.2-02.1 measured by the purchase price or fair
market value of such property, whichever is greater, unless the property has been
previously subjected to a sales tax or use tax by this state, and the tax due has been
paid. This section does not apply to a contractor or subcontractor that does not enter a
contract for the purchase of the tangible personal property.
2.The provisions of this chapter pertaining to the administration of the tax imposed by
section 57-40.2-02.1, not in conflict with the provisions of this section, govern the
administration of the tax levied by this section.
3.The tax imposed by this section does not apply to:
a.Production equipment or tangible personal property as authorized or approved
for exemption by the tax commissioner under section 57-39.2-04.2;
b.Machinery, equipment, or other tangible personal property used to construct an
agricultural commodity processing facility as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.3 or 57-39.2-04.4;
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c.Tangible personal property used to construct or expand a system used to
compress, process, gather, or refine gas recovered from an oil or gas well in this
state or used to expand or build a gas-processing facility in this state as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.5;
d.Tangible personal property used to construct or expand a qualifying oil refinery as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.6;
e.Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.10;
f.Tangible personal property used to construct or expand a qualifying facility as
authorized or approved for exemption by the tax commissioner under section
57-39.2-04.11;
g.Materials used in compressing, gathering, collecting, storing, transporting, or
injecting carbon dioxide for use in enhanced recovery of oil or natural gas as
provided in section 57-39.2-04.14;
h.Tangible personal property used to construct a qualifying fertilizer or chemical
processing facility as authorized or approved for exemption by the tax
commissioner under section 57-39.2-04.15; or
i.Tangible personal property used to construct a qualified straddle plant, a qualified
fractionator, or qualified associated infrastructure as authorized or approved for
exemption by the tax commissioner under section 57-39.2-04.16.
j.Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.21.
k.Tangible personal property as authorized or approved for exemption by the
tax commissioner as provided in section 57-39.2-04.20.
SECTION 3. REPEAL. Section 57-39.2-04.19 of the North Dakota Century Code is
repealed.
SECTION 4. EFFECTIVE DATE. Sections 2 and 3 of this Act are effective for taxable
events occurring after June 30, 2025.
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